Millions of would-be entrepreneurs dream of creating a new product or service and building a successful business.
But a small percentage actually do.
One reason so few people actually pursue their dreams is that the journey from idea to reality is seldom discussed, making it seem like new products somehow magically appear.
That's why I talked with David Karon, the co-founder of KHDK Electronics, a company he started with Metallica lead guitarist Kirk Hammett to design and manufacture guitar pedals. (Here's my interview with Kirk about the genesis of KHDK.)
David and I talked about why they decided to start a company, how they decided to make pedals, how they found the perfect engineer and then the right manufacturing facility, their building the business... and a lot more.
No one runs an ad that says "Business partner wanted." How did you and Kirk join up?
Originally I worked for U.S. Music. They make products like Washburn guitars and Randall amps. I was director of artist relations, which meant I helped create signature products for musicians. Together we would draw up designs, create tones... we did all those things collaboratively.
That led to my relationship with Kirk. At first it was mostly just hanging out because "artist relations" should always start with building a relationship with the artist. After about a year we started creating an amp and realized we spoke the same language as far as how to make the tones we hear in our heads come out. We worked well together and it was a lot of fun.
Later I left U.S. Music and moved to Prague with my wife. At one point Metallica was playing in Prague so we met for dinner and reminisced and remembered all the fun we had creating things... and Kirk said, "Let's do something new together."
How did you settle on guitar pedals?
We had lots of options. Kirk is Kirk, so we definitely could have gone into guitars or amps.
But we didn't want to do that. Guitars and amps involve a lot of customer service, much of it related to problems. Temperature changes affect guitars. Amps can be touchy. Shipping costs are high and the possibility for damage is fairly high. And because of the nature of the components, it's really hard to manufacture each one perfectly.
We thought about it and realized that our interactions with customers were more likely to be negative instead of positive. We want to build relationships instead of fix problems. Even though we love guitars and amps, we decided going into that business just wasn't right for us.
What is right for us is pedals. It was actually an easy decision because we both love pedals and how they can make the sonic possibilities almost limitless.
So you decide to make pedals. How do you start?
Our first task was to find an engineer who could help create and be a part of our vision. We also wanted someone creative; we didn't just want to tell that person what to do.
Beyond that, we also wanted to find an underdog. Some engineers are so famous within the industry it's almost like they are their own brand. Because Kirk is involved we could easily have gone to any number of established engineers... but we wanted someone new and young and different.
We found Antonin Salva through a recommendation from our friend Jason Baskin, a guitar technician who has worked for bands like Smashing Pumpkins, Guns 'n' Roses, Muse, and the Zac Brown Band. Antonin had built a rig for Billy Corrigan. Jason said, "This guy can create anything you guys want -- and his ear is perfect."
So I set up a meeting with Antonin in Prague and we quickly found that our personalities fit. Some engineers can be more of a rock start than a rock star, and we really wanted someone fun to work with.
Antonin had everything we were looking.
How did you determine what you would do first?
While we had a lot of ideas, the first pedal we decided to make was the No. 1 Overdrive.
It was something we really wanted to create because it was a tone we had in our heads for a long time; if you're a touring musician and can't afford to fly all your gear, you can use this pedal to replace some of it.
We also didn't want our first product to be derivative. We wanted it to be something new.
But that doesn't mean we won't produce our own version of some classic pedals. Our Ghoul Screamer is a version of a tube screamer; we don't hide behind marketing and pretend it's totally new. The Ghoul Screamer is our take on a classic pedal.
You say it was a tone you had in your heads... but how do you translate what you hear in your head into language an engineer can work with?
That's why Kirk and Antonin and I work so well together. Somehow we can describe what we're looking for in terms we all understand. Sometimes that means using historical references like "an old Marshall amp but with more mid..." Sometimes you start making funny noises with your mouth. However it works, there's this language between gear heads that comes across.
Plus Kirk has so much expertise. He can say, "There's too much mid-range there and we need to pull 2k out..." he has years of experience to draw from.
And sometimes Kirk just says, "Do this... and then go (freaking) crazy."
How long was the process from deciding to start a company to getting the first product to market?
The No. 1 Overdrive was a three-year process. I know that sounds long, but it wasn't painful. We knew going in that we would take our time so we could go to market with something that not only Kirk loved but that other artists would love.
Plus there's a lot more involved than just coming up with a prototype we love. Parts, schematics, design, build quality... our pedals must be able to be manufactured effectively and efficiently.
Fortunately our manufacturing team is great about telling us exactly what we can and can't get away with.
That raises a good point. Finding the right manufacturer is something a lot of entrepreneurs struggle with.
We definitely did. Originally we had our prototypes manufactured in China and the failure rate was 75%. I had worked with that manufacturer in the past, and working with a factory in China wasn't new to me.
In this case, though, it just didn't work.
That was a massive stress point. We were just about to go to a trade show and the first shipment was dreadful.
So we took a step back. Creativity and innovation are definitely important, but the most important thing is putting out a product that is as reliable as anything in the industry. That's not just important for our customers, that's important for us.
Through some friends we found a family-run factory in Paducah, Kentucky. Their primary business was building speakers for the Navy and for guitar amps but they were also manufacturing pedals. We visited them and everything was a great fit for us, from the way the factory was was run to the attitude of the people working there.
And they're a small family business, just like us. They just love making great products. And they care: every pedal that goes out is tested by an actual guitar player. They plug it in and test it before it goes.
Our goal was to have 1% or less failure rate. So far it's been .5%. That's the peace of mind that we were looking for when we started this.
We also appreciate that they can grow with us. If we need 10 pedals, they make 10. If we need 1,000, they make 1,000. Manufacturing on demand -- and with excellent quality control -- is big for us because that lets us focus on our customers, on developing new pedals, and on building relationships with other artists.
We didn't go into this to deal with problems. We went into this to create cool new stuff we hope musicians will love.
How does turning your ideas over to manufacturing work?
We give them schematics, a physical prototype that Antonin has built... all the stuff they need.
That way when they pull their first unit off the line they can compare the hand-wired version to the final production version.
We're in the process of doing that right now with a new pedal that will be another "Kirk" pedal built specifically for Metallica's new record. We'll get the first manufacturing prototype soon.
Distribution is also a huge factor. Many entrepreneurs fail simply because they can't get their products in front of consumers.
We chose not to sell them ourselves. We chose to use a dealer network.
Sure, we could have put up an e-commerce website... but the dealer network is an additional marketing channel. And some of our dealers are such champions for our brand. They really get what we're doing.
But we do have sales reps, and I handle sales as well... and so far it's working. We've already exceeded our growth target for the first year. Our expectations were realistic and we've surpassed them. And we continue to keep realistic expectations.
We want to grow slowly. Right now we only have four products. Five and six should come out before the end of the year. We're being patient and are waiting to have more products before we make a bigger push towards more retail.
We also think it's important to build great relationships with our dealers. If we started out with 200 dealers, how would we ever know them all by their first names?
We want to know who are dealers are and have actual relationships with them.
How did you determine your pricing strategy and price points?
We don't want to price ourselves out of the existing market and we don't want to sacrifice on quality. And we know that dealers have expectations -- why would they carry your products if they can't make a reasonable return -- and we wanted to meet those expectations.
So with all that in mind, we decided to make less margin on each unit sold. As we grow as a company, profit isn't as important as growing the brand and creating loyal customers. So for now our goal is to break even. And we are.
Keep in mind our long-term goal is to leave this company to our kids to run, so we're focused on slow, steady growth. Plus, we want to enjoy every minute of it instead of just putting out a bunch of products as fast as we can and making a lot of money and then bailing.
We want to build a business that lasts, and that drives the decisions we make.
At some point will you add other artists to your creative process?
We already are. And we have an advantage where that's concerned because Kirk and I cover both ends of the artist relationship spectrum: together we've been there, done that, and know how it looks. We're extremely artist-friendly because we know how to help people create the sounds they want to hear.
The key is to not limit the artist's imagination and creativity... and then try to figure out how to fit that into a manufacturing process and a product price that makes sense. That is sometimes a challenge, but it can also be pretty rewarding. I like bridging that gap.
So yes, we have some cool collaborations coming. Not only is doing that a lot of fun, it will also help build our brand and our business.
I would think that doing this with Kirk is both extremely positive and yet has a negative side. He's a metal guy, but you're not just making pedals for metal guitarists.
That does create a little of a double-edged sword. For example, some dealers in Nashville might think we're strictly a metal company -- so we do have that perception to overcome.
But of course that's wrong. As a musician you listen to everything... so when we create our pedals we think about versatility and about any guitar player using our pedals, not just a metal head. So while Kirk is a partner we're definitely not just metal.
It is funny sometimes, though. If we put out a pedal that isn't "metal," some of Kirk's fans want to know why we would put out a pedal like that.
I don't know any great guitarists who can only play one style of music, let alone enjoy only playing one style of music. What they might be known best for isn't the only thing they like.
Speaking of "like," what's the most fun part of all this?
Coming up with the ideas. Kirk and I and Antonin dreaming and talking and figuring out what's next.
Each product launch is also fun... but the lead-up to that is the cool part. The launch is actually a little nerve-wracking because you've put your heart and soul into something and you're sending it out into the world. Fortunately we've gotten great reviews, but still.
The really fun part is the round table: Antonin, Kirk, and myself imagining something and then then plugging a guitar in and saying, "Wow, that actually happened."
What has been the hardest part?
It hasn't been harder or easier; it's about what I thought it would be. We keep our expectations low so we can be pleasantly surprised.
I've used my previous career experience as a guide for what not to do and for a sense of how the business would go.
Patience is key. You can't expect immediate gratification, and when you're patient that lets you be open to some really great stuff. We have some great dealers, some great customers, some great relationships with other artists... it's easy to forget how great people can be when you're just stuck in your bubble.
We're breaking even right now, and that makes us happy, and we're even happier because of how much fun this has turned out to be.